"Employment Inequalities"

This paper documents the employment disadvantage faced by the less qualified part of the labor force and examines the factors that influence the differing extent of this disadvantage across OECD countries. We argue that employment rates for quartiles of the population ranked by educational qualification provide the best m easure of employment disadvantage. We show that differences in these employment rates for the most- and least-educated quartiles vary substantially within Europe, but are not on average higher than those in the USA. The least qualified suffer the greatest employment disadvantage in countries in which the overall employment rates are low and, for men, the literacy test scores for the least qualified are relatively low. A high level of imports from the South appears to be associated with greater employment disadvantage, but there is no discernible tendency for a high level of wage dispersion, low benefits, or weak employment protection legislation to be associated with greater employment disadvantage. Labor market flexibility has not been the route by which some OECD countries have managed to minimize the employment disadvantage of the least qualified

Services and Employment: Explaining the U.S.-European Gap

Why is Europe's employment rate almost 10 percent lower than that of the United States? This "jobs gap" has typically been blamed on the rigidity of European labor markets. But in Services and Employment , an international group of leading labor economists suggests quite a different explanation. Drawing on the findings of a two-year research project that examined data from France, Germany, the Netherlands, the United Kingdom, and the United States, these economists argue that Europe's 25 million "missing" jobs can be attributed almost entirely to its relative lack of service jobs. The jobs gap is actually a services gap. But, Services and Employment asks, why does the United States consume services at such a greater rate than Europe? Services and Employment is the first systematic and comprehensive international comparison on the subject. Mary Gregory, Wiemer Salverda, Ronald Schettkat, and their fellow contributors consider the possible role played by differences in how certain services--particularly health care and education--are provided in Europe and the United States. They examine arguments that Americans consume more services because of their higher incomes and that American households outsource more domestic work. The contributors also ask whether differences between U.S. and European service sectors encapsulate fundamental trans-Atlantic differences in lifestyle choices. In addition to the editors, the contributors include Victor Fuchs, William Baumol, Giovanni Russo, Adriaan Kalwij, Stephen Machin, Andrew Glyn, Joachin Möller, John Schmitt, Michel Sollogoub, Robert Gordon, and Richard Freeman.services, employment, jobs gap, rigidity, labor market, health care, education, incomes, lifestyle, United States, Europe

WP 46 - Low pay incidence and mobility in the Netherlands – exploring the role of personnel, job and employer characteristics

The rise of earnings inequality in many industrialized countries in recent years has increased concerns about the pay conditions of those individuals located at the bottom of the wage distribution. In this paper we first analyze which groups in the Dutch labor market are more likely on average to fall in low-wage segments, and which are the characteristics of workers and firms that are more closely related to low wage rates. We also explore how the pattern of low-wage employment has evolved over time. Second, we examine the determinants of being in low-wage employment for the individual worker, and we analyze whether there exists a type of “poverty trap” as a result of which earnings mobility is lacking and some workers persist in low-paid jobs for a long period of time. To achieve this we use two datasets: the European Community Household Panel (ECHP) for the period 1995-2001, and the Arbeidsvoorwaarden Onderzoek (Labor Conditions Survey, AVO) of the Dutch Labor Inspectorate for 2002. We utilize the longitudinal aspect of the ECHP to analyze the evolution of low-wage employment over time, by looking at different individual and job characteristics. Finally, we complete the analysis on low-wage employment with an examination of the role of the firm using the detailed information provided by the AVO.

WP 48 - Population ageing in the Netherlands: Demographic and financial arguments for a balanced approach

Dutch policy makers recently set the public debate on ageing alight by enforcing drastic cuts in early retirement opportunities; increasing taxation of the aged and augmenting retirement age are also considered. The prime argument is to diminish a burden on public finances far in future. This paper argues that this argument ignores, first, that on a cohort basis ageing is a very limited problem and, therefore, also the financing of future occupational pensions based on capital funding. Second, data taken from the Income Panel Survey show that the financing of the basic pay-as-you-go state pension AOW over the coming decades is not a major problem that could not be solved by the future increase in employment participation which may plausibly be expected. Because of its strong focus on public finance Dutch policymaking also ignores important inequalities in the ageing process as well as important cost disadvantages of private pension funding in comparison with collective schemes – two aspects which, by contrast, are central to the UK pension debate. The first inequality concerns the risk of increased poverty among retired women that may result from the changes made in the occupational pension system and occur because of low lifetime earnings from the massive part-time employment; the phenomenon should be discussed and prevented. Second, the life expectancy of the low educated is significantly shorter than that of the better educated. In the case of a uniform pension age this induces the risk of a transfer of pension savings from the former to the latter, from the less to the better paid; this should be accounted for when discussing augmenting the pension age.

WP 71 - The Dutch minimum Wage. A radical reduction shifts the main focus to part-time jobs

The paper is part of a broader international project undertaken by the ILO and the European Commission. It studies the Dutch minimum wage from the perspective of country differences in minimum-pay regulations within the European Union with the aim of serving as an input into a discussion whether a European approach to such regulation may be desirable and feasible or not. The European issue itself is not considered here. In a historical perspective, going back to the establishment of the minimum wage in the 1960s, three characteristic features are presented and discussed at some length: * the very long tail of youth minimum wages staring at age 15 up to age 23 - the oldest age in international comparison at which a full minimum wage applies; * the pivotal role of the (net) minimum wage for determining (net) minimum social benefits and therewith for much of public social-security spending; * the steep decline in recent decades of the minimum wage both in terms of purchasing power and relative to the rest of the wage distribution. A brief description is given of the mechanism of uprating over time of the wage level and the coverage of employees. The declining value since 1979 is shown and compared to the rather similar evolution of the US minimum wage. The relations of the minimum wage to poverty, wage inequality, employment, wage bargaining and social dumping are scrutinised. It appears that the decline of the minimum wage has greatly reduced its labour-market significance. As a result the well-known long-run Dutch wage moderation has affected lower levels of pay more than higher one inciting an increase in earnings inequality. In one of two case studies, of retail trade where youth minimum wage earners are concentrated, shows how unions and employers are gradually beginning to perceive the downside of the long tail of very low youth minimum wages for the motivation of young workers and the productive innovation of their business.

GINI DP 9: Comparable Indicators of Inequality Across Countries

This paper addresses the key issue for the GINI project of how best to approach the measurement of income inequality and wage inequality to enhance comparability across different studies. It focuses fi rst on income inequality, dealing with the defi nition of income, the income recipient unit, and the unit of analysis. The summary measures used to capture inequality are also discussed, with an emphasis on capturing trends at different points in the distribution, and sources for comparative data on inequality levels and trends are discussed. The paper then turns to inequality in earnings among employees and discusses the same set of issues in that context. The above bears directly on any analysis of inequality itself but it is also important for an analysis of the direct impacts of inequality at micro-level. For a (multilevel) analysis based on aggregate inequality as an input the paper provides an understanding of the need for comparable concepts and defi nitions across countries and links to data sources as well as aggregate levels. It also links to practical experiences of researchers with different datasets. For this and the datasets see the Data Portal at "gini-research.org":http://www.gini-research.org